Banks lending to the Middle East have had to be quick on their feet over the last six months. So far in 2006 the region's banks — one of the main features of last year's market — have shown a preference for bond issues, having already locked in medium-term loans at knock-down prices.

Lenders have been left to compete for chances to fund Middle Eastern companies' increasingly ambitious debt requirements.

"The transparency of the corporate market in the Middle East is improving," says Julian van Kan, head of loan syndications and trading for Europe, the Middle East and Africa at BNP Paribas in London. "There are more lenders looking to diversify away from tightly priced project financings and bank deals, and those lenders are building up a better understanding of corporate credits."

The bank's loan origination and sales for the Gulf region are managed in London by Mark Waters and Stuart Perry, but the bank has six branches in the region — Bahrain, Dubai, Abu Dhabi, Qatar, Saudia Arabia and Kuwait.

"That enables us to kick the tyres on a deal and get some invaluable feedback from the local markets," says van Kan. "We run our regional coverage through the Bahrain office, which is also where our Shari'ah board sits — Islamic finance is an important part of our business plan."

BNP Paribas finished second in last year's bookrunner league table for Middle Eastern and African lending (excluding project finance), arranging 13 deals worth just under $3.8bn.

Mark Waters, a member of the bank's Middle East origination team in London, says: "Over the last six to nine months we have increased our attention on the Middle East, so there is now greater interaction with the relationship teams in the region. We have offices in all the countries that are part of the GCC [Gulf Co-operation Council] except Oman, so we work alongside relationship managers and with sector specialists in areas like media and telecoms."

That approach paid dividends when Kuwait's Mobile Telecommunications Co, or MTC, chose BNP Paribas as one of four banks to arrange a $4bn five year loan in May.

But Waters says the bank is equally at home raising debt on a smaller scale for companies and financial institutions looking to change their debt profile.

For example at the start of 2006 the bank launched a $500m five year murabaha facility for Kuwait Finance House: "KFH wanted to raise debt, partly to address an asset-liability mismatch, but also to raise their profile in the international markets," says Waters.

"We put together an Islamic structure using conventional pricing and signed the deal for $850m, the largest ever for a bank borrower on that basis."

The market has changed, he adds, because both blue chip companies and mid-caps are looking to raise debt. United Real Estate Co, for example, wanted to replace expensive local debt with cheaper dollar debt and the syndicate on its $100m April deal was split between international and regional banks, so the company was no longer reliant solely on Kuwaiti lenders.

And where BNP Paribas is prepared to go, most lenders are prepared to follow: "As a bank we are quite conservative," says van Kan. "We are a lender not just an arranger, and borrowers appreciate that."